The Rhipe Ltd (ASX: RHP) share price is trading flat this morning. This comes after the software company provided investors with a business update on its preliminary results for the first half of FY21.
In early morning trade, the Rhipe share price swapped hands for $2.01, up 1.5% but has since retreated to it opening price of $1.98. Let's take a look at the results.
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What's driving the Rhipe share price higher?
In today's release, Rhipe highlighted that for the period ending 31 December, growth has been achieved across all key metrics.
Group revenue rose to $30.5 million, reflecting an increase of 15% over the prior corresponding period (pcp). The company attributed the positive result to its subscription software licencing of Microsoft public cloud products. In the last 6 months, Microsoft Office365 licensees jumped more than 90,000 seats to record a total of 720,000 seats.
As a result, gross profit also lifted to $27.7 million, representing a gain of 11% compared to this time last year.
Operating expenses moved slightly higher to $19 million, a marginal 3% increase over the pcp. Its licencing business achieved lower costs due to fewer employees, marketing, and travel-related outflows as a result of COVID-19. However, expenses rose from its rhipe solutions business as the company focused its efforts on investing for the future.
Group operating profit (gross profit minus operating expenses) came to $8.8 million, up 34% on H1 FY20. The overall result was complemented by strong growth in its licensing business, and management's strict cost control.
Earnings before interest, tax, depreciation and amortisation (EBITDA) grew to $7.7 million, an uplift of 10% over the comparable period.
Rhipe reported to have a cash balance of $57.5 million at the end of the first-half, after paying dividends to shareholders, and investing in the Parallo acquisition.
Outlook
Management noted that despite COVID-19 operating challenges, its large and diversified reseller base has proven resilient. It believes the robust performance will continue to run into the second-half, especially with future investments to drive business growth.
Consequently, the group is forecasting its full-year operating profit for FY21 to be $17.5 million. This would imply an 27% increase when compared to the prior year's result.
The company is scheduled to release its final half-year results for the 2021 financial year on 16 February.
